New info on loans found (12/10/07)

The only collateral for nearly $500,000 in Economic Development Income Tax funds lent to Omnicity Inc. was equipment that may already be obsolete because of rapidly advancing Internet technology.

Jay County Development Corporation executive director Bill Bradley presented Jay County Commissioners this morning with copies of two loan agreements between JCDC and Omnicity, an Indianapolis-based wireless Internet provider serving rural Indiana communities.

The commissioners had requested the documents at the urging of The Commercial Review.

The first loan agreement, dated Oct. 18, 2004 was for a total of $380,000. Omnicity received those funds in three installments, one of $50,000 on Nov. 1, 2004, a second of $100,000 on Dec. 7, 2004, and a third of $230,000 on Feb. 4, 2005. Separate promissory notes were provided for each installment, specifying the interest rate.

The second loan agreement, dated June 26, 2006, was for an additional $114,500 and was for the deployment of "Phase III" wireless high-speed Internet and broadband service to the county.

The agreements were between Omnicity and JCDC and were signed by the late Robert Quadrozzi, then executive director of JCDC, and Michael E. Earley, chief executive officer of Omnicity.

As to a paper trail for the transfer of the funds from the county to JCDC, Bradley said this morning he has found none.

"I have not found any paperwork whatsoever of how the money came from the county to JCDC," he said. "I don't think they exist."

Bradley said it's also unclear why JCDC was receiving the interest payments on the Omnicity loan. In the case of all other EDIT loans, both the principal and interest are paid back to local government, he said.

"We're trying to research that issue," said Bradley. "We're not sure where this (arrangement) originated. ... We're going to continue to research that question. ... It's still a mystery to us why these documents were written the way they were written. ... I find no paper trail at this point."

Omnicity has been in arrears on the loans for months. The last payment on principal to the county was in March, while an interest payment was received by JCDC in September.

"The equipment is what they were putting up as collateral?" said commissioner Gary Theurer.

Bradley agreed but noted that the speed of technological change means the equipment could already be outdated.

"You'll have to keep digging," said commissioner Milo Miller Jr.

All three commissioners expressed support for Bradley's efforts to tighten EDIT lending policies.

"It'll stop this from happening anymore," said Theurer.

"We'll get this behind us," said Bradley. "If I find anything else I'll let you know."

In other business, the commissioners:

•Hope to set up a meeting in January between the county, the city, the new sewer district, and POET Biorefining to clarify responsibilities for the sewer lines and lift stations built to serve the new ethanol plant.

•Reviewed a Homeland Security grant application prepared for JEMS that would provide 800 megahertz radios that would improve communication between ambulances, the hospital, and rescue helicopters. If approved, the grant would be for about $3,000.

•Approved through two readings an ordinance that specifies that any property tax rebates must first be applied to any delinquent taxes.

•Re-appointed county department heads who served in 2007 for 2008.

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